When Sen. Heidi Heitkamp, D-N.D., got the news that the U.S. Supreme Court would be taking up a case on state’s rights to collect sales tax on online sales, she just started smiling.
“I’m absolutely thrilled,” she said.
For Heitkamp, the court battle has been 27 years in the making.
Heitkamp served as North Dakota’s tax commissioner in 1992 and helped bring forth the case, Quill v. North Dakota, which involved a mail-order company that tried to gain the right for states to collect taxes on companies selling products remotely to customers in the state. Ultimately, the high court said retailers can be forced to collect taxes only in states where the company has a “physical presence.”
The North Dakota Tax Department has previously estimated the state loses from $7.5 million to $10.2 million per year in sales and use tax on internet purchases made by consumers.
A total of 36 states and the District of Columbia had asked the high court take up the issue. In a brief filed with the court, states wrote, "As the volume of internet-based retail transactions continues to compound daily, the physical-presence rule exacts an ever-increasing toll on the states' fiscal health."
The states said that, according to one estimate, they'll lose out on $211 billion in tax revenue over the next five years if the Supreme Court's previous rulings stand.
Heitkamp has been trying to reverse that early decision legislatively over the past five years, investing a large portion of her career in the issue. She thinks South Dakota’s challenge to the law, South Dakota v. Wayfair, could be the impetus for change.
“The only reason for the Supreme Court to take this case is if it intended to modify Quill,” she said.
Three current justices — Clarence Thomas, Neil Gorsuch and Anthony Kennedy — have expressed doubts about the Quill ruling. And Heitkamp points to a statement made by Kennedy, saying he thought the Quill decision was questionable and should be revisited, as a good sign.
Heitkamp said she looks forward to attending the arguments, which will likely take place in April.
The Associated Press contributed to this article.